April 3, 1973
Page 10776
BARRIERS TO HEALTH CARE FOR OLDER AMERICANS: VIEWS OF THE NATIONAL COUNCIL OF SENIOR CITIZENS
Mr. MUSKIE. Mr. President, I am deeply concerned about the health care crisis facing our Nation's elderly. As chairman of the Subcommittee on Health of the Elderly, I opened hearings last week on "Barriers to Health Care for Older Americans." The first round in the series had a twofold purpose.
First, we gathered valuable testimony for our overall study. Those who appeared before the subcommittee provided information on the major problems we will be exploring in more depth in further hearings in Washington and the field, or in special reports that might be issued in connection with the hearings.
Second, our March hearings served a more immediate purpose. We took an intensive look at the administration proposals to increase the cost of coinsurance and deductibles for medicare participants. This is an issue of great concern to the subcommittee.
The National Council of Senior Citizens sent me for the hearing a statement on the administrations' proposed cutbacks in medicare.
Mr. President, the subcommittee is grateful to have the forceful and well reasoned views of this outstanding organization on the issue of medicare cutbacks. The statement that NCSC has
prepared will greatly assist us as we continue our examination of this crucial matter. Their analysis of the effects of the cutbacks is, I am certain, something my Senate colleagues would like to study in detail.
I ask unanimous consent that the statement of Nelson H. Cruikshank, president of the National Council of Senior Citizens, be printed in the RECORD.
There being no objection, the statement was ordered to be printed in the RECORD, as follows:
STATEMENT OF NELSON H. CRUIKSHANK
COMMENTS OF THE NATIONAL COUNCIL OF SENIOR CITIZENS ON ADMINISTRATION'S PROPOSED CUTBACKS IN MEDICARE
The 3,000,000 members of the National Council of Senior Citizens reacted with dismay to President Nixon's budget message. We were shocked to learn that rather than improving the Medicare program along lines proposed by the White House Conference on Aging, the President proposes extensive cutbacks in the existing program.
After studying the President's proposal, the 50-member Executive Board of the National Council of Senior Citizens expressed the serious concern of the Council's membership in a resolution denouncing the drastic Medicare cuts "as an attempt to win favor with the well-to-do at the expense of the defenseless sick elderly of the nation."
Noting that President Nixon seeks to require Medicare patients to pay about three times as much as they now pay for an average hospital stay and a substantial increase in the personal payments required under Medicare medical insurance (Part B), the Executive Board warned: "This means denial of needed health services to a vast number of men and women who can barely meet the present Medicare out-of-pocket payments."
We strongly believe, the enactment of the President's proposal would constitute a most serious barrier to health care for older Americans!
NCSC's views echoed by the Nation
This nation's elderly are not alone in their opposition to the President's proposal; they are joined in opposition by their sons and daughters who are currently making the payroll contributions for Medicare.
The National Council of Senior Citizens has always taken pride in the fact that its membership is concerned with the welfare of people of all ages, members or not. We have often said in testimony to this Committee and other Committees that our members place their responsibility as parents and grandparents before their own self-interest.
Medicare could not have been enacted without the whole-hearted support of our younger working population who saw this program as protection badly needed by their aged parents now and by themselves in their own old age. Just as the population of all ages won the battle for the enactment of Medicare in 1965, the population of all ages can be expected to fight the battle against Mr. Nixon's proposed cutbacks. As evidence, we would cite the recent Harris Survey that showed that 92 percent of all people questioned about Mr. Nixon's various proposals for major changes in federal spending disagreed with his proposal to "make older people pay more than they now pay for Medicare"; only 5 percent agreed.
Of the various proposals, this was the one on which the population most strongly disagreed.
Although agreeing two to one that inflation cannot be controlled unless federal spending is cut to the bone, the public's response to cutbacks in Medicare and other needed social welfare programs indicates the President is very out of step with his spending priorities. In a related question, Harris also found an almost 3 to 1 public agreement with the recently increased Social Security payments. Clearly, President Nixon does not have a mandate to maim and kill basic social welfare programs!
The National Council of Senior Citizens is therefore counting strongly on the support of all our people in defeating the drastic cutbacks in Medicare sought by Mr. Nixon.
A "paper saving" for the President's budget
But the public is not upset only by the proposed cutbacks; they are also upset because the elderly sick and the workers are being used by the President to effect a paper reduction in the budget deficit.
Mr. Nixon, while urging massive cutbacks in Medicare benefits for the workers' elderly parents, made no recommendation to cut back on the payroll taxes the worker pays or the premium the elderly pay to support the Medicare program. By maintaining the Social Security tax as it is, the President is making available as a paper surplus in his unified budget, in effect, another $1.7 billion a year which is now going to support benefits that the proposes to abolish.
To be sure, Mr. Nixon cannot expend this money for anything else. But it is not being spent for the purpose for which Congress imposed the tax – and is therefore a deceitful misuse of the Social Security trust funds. It releases other money the Administration can use to boost the Pentagon budgets.
Thus under the President's budget proposal the elderly sick and the working people would be the victims of a double-edged assault – increases in taxes and premiums accompanied by reductions in health protection.
The proposed cutbacks
As you know, under the guise of reducing what is termed "unnecessary utilization of hospital services," the President proposes that the present deductible of $72 for the first day under hospital insurance be increased to the actual first day charge for room and board. In addition, each Medicare patient would be required to pay a "co-insurance" amount equal to 10 percent of his subsequent hospital bill. In contrast there is no additional charge currently under Medicare for the first 60 days, $18 per day for days 61-90, and $36 per day for "lifetime reserve days" from 91-150.
The financial implications of such a change would be grave. This change would shift an additional burden of an estimated $345 million in hospital costs, during the last six months of Fiscal Year '74, onto the backs of an estimated 5.4 million hospital insurance beneficiaries, or an average out-of-pocket increase of $64.
With this proposal there would be a sharp increase in out-of-pocket expenses for almost all hospital stays. (The great majority of hospital stays are well below 60 days in duration; only about 5 percent of the hospital insurance beneficiaries report total annual hospital days in excess of 60.) Using the rounded-off current average hospital charge under Medicare of $100 per day, the President's proposal would provide relief for only the handful of patients requiring hospital stars of 105 days or more. But for most stays the out-of-pocket costs would soar:
Three-fold increase for an average hospital stay, from $72 to $220 for a 13 day stay.
Almost ten-fold increase for a 60 day stay. from $72 to $690.
While providing relief to an extremely small number of patients, the Nixon proposal would have the accompanying disadvantage of removing the financial disincentives to utilize a hospital as a long-term care facility. This situation would occur because of the change from the progressively higher out-of-pocket per diems currently under Medicare to the President's flat rate of 10 percent.
Another criticism of the Nixon proposal is that the out-of-pocket hospital costs would vary across the country, in accordance with local hospital charges. In other words, in those areas where hospital charges are high, such as California, Northeastern States, and large central cities, a patient would have to pay significantly more for his hospital care than a patient in Wyoming or a rural area.
Medicare patients currently pay the same rate for identical care, regardless of the hospital's normal charge. But under the President's proposal the out-of-pocket charge would vary among hospitals for identical care, since it would be always one-tenth of the hospital's normal charge.
The President's proposal could result, therefore, in a disparity between out-of-pocket expenses of as much as 150 percent for identical care in two different hospitals. The burden of this hospital coverage cutback would fall much more heavily on the elderly in high hospital cost areas than in low cost areas.
The budget message also includes less severe proposed cuts in the Supplementary Medical Insurance Program (Part B). The proposal would increase the deductible by 42 percent, from $60 to $85, and the coinsurance of the subsequent cost to the beneficiary by one-fourth, from 20 percent to 25 percent. The increased burden due to this change during the last six months of Fiscal Year '74 is estimated to be $171 million for 11.6 million SMI beneficiaries, or an average out-of-pocket increase of about $15.
The increasing personal burden which would be shifted to the elderly sick under the Nixon proposal for SMI is exemplified by a person with a $200 bill of covered medical expenses. Currently, the person only has to pay $88, whereas with the Nixon proposal he would have to pay $113.75, an increase of 29 percent. In fact, because of raising both the SMI deductible and co-insurance nobody would benefit.
The related problem of assignment
A related problem is apparently not touched in the President's budget message – the erosion of SMI coverage due to the increasing refusal of doctors to take "assignment". Under the "assignment" method of payment the doctor agrees to accept the "reasonable charge" as payment in full. The proportion of doctors taking assignments has decreased in the last few years from some 60 percent to 41 percent and can be expected to decrease still further if Medicare is weakened.
Table 1 illustrates progressive erosion of Medicare coverage as the doctor's bill moves from "reasonable charge" (or assignment charge) to 10 percent above "reasonable charge," and to 20 percent above "reasonable charge."
[Table Omitted]
The reduction of Medicare coverage due to the lack of control over medical charges can be exemplified by the hypothetical case of a man who has received 5 days of hospitalization and $800 of Part B medical care. If the $800 is billed under "assignment," Medicare will pay 78.5 percent of his total bill. However, his coverage is eroded if that medical bill is 10 percent above "reasonable charge" to 74.0 percent, and only 70.3 percent if 20 percent above "reasonable charge."
The table also displays:
The more extensive coverage of hospital charges vs. medical charges.
The more extensive coverage of hospitalization for 60 days or less vs. over 60 day stays.
It should also be borne in mind that the medical expenses in the tables are not total expenses for an illness in a typical case since they include only covered expenses and do not include, therefore, such items as out-of-hospital drugs. If such items were included the percentages in the table in almost all cases would be smaller.
The disastrous combination of President Nixon's proposed Medicare coverage reductions and the increasing refusal of physicians to accept the "reasonable charge", that is to take "assignment", for medical care is graphically outlined on Table 2. Using again the hypothetical case of the man with 5 hospital days and $800 medical bill, under "assignment" in Nixon's proposal he would get further reductions to 68.9 percent coverage, 64.8 percent if 10 percent above "reasonable", and 61.3 percent if 20 percent above "reasonable".
The real effects of deductibles and coinsurance
Many studies have been conducted on the utilization of health services under deductible and coinsurance provisions. Common conclusions cited by these studies are that the only circumstance which leads to reduced utilization is when the deductible and coinsurance are set high. But at high levels they are found to create a financial hardship and discourage prudent health service utilization. On the other hand, smaller rates are nothing more than administrative nuisances and will hardly act as a utilization control
President Nixon's record on part B premiums
Mr. Nixon, after repeated promises to eliminate the Part B premium for doctors insurance – a premium that will increase to $6.30 in July – now proposes to retain this premium while simultaneously making deep slashes in Medicare benefits.
Part B premiums bear heavily on the low incomes of older people who are attempting to insure against some portion of their medical costs. Since January 1, 1966 when the program began, premiums have more than doubled, an 110 percent increase. Coupled with the recent raise in the Part B deductible to $60, the new increase means participants in the voluntary program will have an annual out-of-pocket cost of $136 before they will get even limited reimbursement for medical bills!
Mr. Nixon first recognized the injustice of this burden in his 1971 Health Message when he proposed the elimination of Part B premiums. At that time he also proposed a decrease in Medicare benefits to make up the loss in premiums. He repeated his pledge to eliminate Part B premiums to a White House Conference that had made this an important plank in its recommendations for improved health security for the aged and again in his March 23, 1972 message on aging. But by then he apparently intended that the loss be made up by raiding one of the Social Security trust funds of money needed to pay cash benefits or by increasing the Social Security tax on workers and employers. Needless to say, the nation's elderly would be worse off under these proposals, regardless of how attractive the President made them sound.
Again, Mr. Nixon in campaigning for reelection, and the Republican Party Platform made much of this proposal to eliminate the monthly premium required under Part B of Medicare – "the equivalent of more than a three percent social security increase."
In fact, the claims made for the President by the Committee to Re-elect the President in the pamphlet called "The President Cares" far out-stepped this pledge, making it sound like an accomplished act. Lamenting the fact that the President had failed to stop the increase in medical fees, the pamphlet said:
"The $5.80 monthly premium for Medicare Part B (doctor) insurance is henceforth to be paid for by the government – worth another $1.5 billion to the nation's elderly."
The same pamphlet gave Mr. Nixon credit for increases in social security cash benefits, increases passed by the Congress over a threat of Presidential veto. But the falseness of the claims with respect to Part B premiums must have been evident to every older person who has to pay the premiums – and increasing premiums – every month. What he may not have known is that the President had never even proposed that this premium be paid for by the government.
And once reelected Mr. Nixon has withdrawn from his proposal for eliminating the premium. His proposal now is to continue this heavy burden on the older individual at the same time that Medicare benefits would be drastically slashed.
Nixon proposals flaunt White House Conference recommendations
Mr. Nixon, in his speech to the closing session of the White House Conference on Aging, promised that he would make sure that the recommendations of the December 1971 Conference would not gather dust in the National Archives. Right now the dust covering those recommendations must be inches thick! And his proposals for Medicare cutbacks not only ignore the recommendations for improvement but drastically reverse the course recommended by the Conferees!
One of the major recommendations of the Conference called for making comprehensive health care available to all Americans, including the elderly, without deductibles and without any other coinsurance or out-of-pocket payments, financed under Social Security. Pending National Health Insurance for the total population, the Conferees called for improvements in Medicare and Medicaid. Specifically, benefits should be increased immediately to include, at a minimum, out-of-hospital drugs; care of the eyes, ears, teeth and feet; improved services for long-term care and expanded and broadened services in the home and other alternatives to institutional care.
There should be no deductibles, co-payments, or co-insurance under either program. Medicare should be financed through Social Security payroll taxes and a greatly expanded use of Federal revenues, not through ever-rising premiums paid by the elderly
In conclusion
The President's proposal is clearly an attempt to strip the elderly of their hardfought gains, to turn back the clock of health care progress!
Special note should be made of Nixon's tricky method of making the impact of his proposed cutbacks appear only half as bad as reality. The yearly added burden to the elderly sick is effectively twice what the budget suggests since the proposed changes would only be in effect during the last six months of Fiscal Year '74. The President wants, in effect, to cut back Part A and B coverage more than $1 billion a year! By including other cutbacks obscured in the budget message, the total added burden to the elderly is about $1.7 billion a year.
To add insult to injury, the President makes no proposal to pass this "saving" on to those who contribute to the health insurance trust funds. There is no attempt to use this budget "saving" to reduce the one percent hospital insurance payroll tax, raised in January from 0.65 percent, or reduce the announced increase in SMI premiums from $5.80 per month to $6.30, as of July, 1973. By maintaining the tax and premium, President Nixon is making available as a paper surplus in his unified budget another $1.7 billion a year which is now going to support benefits that would be abolished.
We trust the Congress will never find acceptable this outrageous and unconscionable scheme to steal from the elderly sick and give to the rich, the Pentagon, and the special interests!